OREANDA-NEWS. The Brazilian congress approved a bill that will gradually increase the country?s mandatory biodiesel blend to 10pc over the next 36 months.

The bill was given "urgent" status earlier this week and passed a vote in the full congress today. The senate already approved the legislation, which president Dilma Rousseff has 15 days to sign into law.

Once the bill is promulgated, the mandatory blend, currently at 7pc, will increase to 8pc in a 12-month period. Subsequent blend hikes will need to take place over the following 24 months, with the blend reaching 10pc in three years.

The bill also requires the national energy policy committee (CNPE) to conduct tests on the impact of 15pc blends on diesel motors.

In addition, the bill paves the way for blends of over 15pc in public transportation, railroads and the mining industry.

Biodiesel producers say the industry can meet the new blend requirements in two months. The local industry currently operates with roughly 45pc of unused capacity.

It remains is unclear whether the oil regulator ANP will be able to change the terms for the next regular biodiesel auction, which will take place later this month to supply the local market during May and June.

Lawmakers said the increased use of biodiesel will help to improve urban air quality and diminish the need for imported diesel.

Barring a blend hike, biodiesel consumption was expected to decline in 2016. After falling by nearly 5pc in 2015, conventional diesel consumption in Brazil declined by nearly 17pc in January to 3.94bn liters (799,893 b/d) compared with a year earlier, the lowest level since February 2012.

Brazil's mandatory biodiesel blend has been stable at 7pc since November 2014.